FTA to benefit Indonesia in long term

Aditya Suharmoko, The Jakarta Post, Jakarta | Mon, 01/18/2010 4:11 PM

The recent free trade agreement (FTA) between ASEAN countries and China will be beneficial for Indonesia in the long term because it will allow the country to import cheaper raw materials from China to build infrastructure, Standard Chartered Bank said.

"In the long run it will be advantageous for the economy," Tai Hui, the bank's Singapore-based economist, said in a forum on Monday. He said China had imported a lot of commodities from ASEAN and following the agreement, Indonesia would be able to buy cheaper materials.

Fauzi Ichsan, the bank's economist in Jakarta, said the agreement would have the greatest impact on the textile, garment and electronics industries. "Without the FTA, they're already affected by the crisis.

"The benefit will outrun the cost," he said.

Fauzi said Indonesia needed more infrastructure to spur economic growth. Businesses have often complained that lagging infrastructure causes higher logistics costs.

The government said it would focus on building infrastructure to help reach economic growth of between 6.3 and 6.8 percent over the next five years.